May 01, 2005

Two Paths

For May Day, how about a distressingly well-documented book on how the Great American Risk Shift shows up in the labor market?

Annette Bernhardt, Martina Morris, Mark S. Handcock and Marc A. Scott, Divergent Paths: Economic Mobility in the New American Labor Market (Russell Sage Foundation, 2001)
Book description: The promise of upward mobility — the notion that everyone has the chance to get ahead — is one of this country's most cherished ideals, a hallmark of the American Dream. But in today's volatile labor market, the tradition of upward mobility for all may be a thing of the past. In a competitive world of deregulated markets and demanding shareholders, many firms that once offered the opportunity for advancement to workers have remade themselves as leaner enterprises with more flexible work forces. Divergent Paths examines the prospects for upward mobility of workers in this changed economic landscape. Based on an innovative comparison of the fortunes of two generations of young, white men over the course of their careers, Divergent Paths documents the divide between the upwardly mobile and the growing numbers of workers caught in the low-wage trap.
The first generation entered the labor market in the late 1960s, a time of prosperity and stability in the U.S. labor market, while the second generation started work in the early 1980s, just as the new labor market was being born amid recession, deregulation, and the weakening of organized labor. Tracking both sets of workers over time, the authors show that the new labor market is more volatile and less forgiving than the labor market of the 1960s and 1970s. Jobs are less stable, and the penalties for failing to find a steady employer are more severe for most workers. At the top of the job pyramid, the new nomads — highly credentialed, well-connected workers — regard each short-term project as a springboard to a better-paying position, while at the bottom, a growing number of retail workers, data entry clerks, and telemarketers, are consigned to a succession of low-paying, dead-end jobs.
While many commentators dismiss public anxieties about job insecurity as overblown, Divergent Paths carefully documents hidden trends in today's job market which confirm many of the public's fears. Despite the celebrated job market of recent years, the authors show that the old labor market of the 1960s and 1970s propelled more workers up the earnings ladder than does today's labor market. Divergent Paths concludes with a discussion of policy strategies, such as regional partnerships linking corporate, union, government, and community resources, which may help repair the career paths that once made upward mobility a realistic ambition for all American workers.

Their documentation for the descriptive claims about what has happened to the labor market and to career paths is compelling, and statistically impeccable; also completely in accordance with, y'know, actually looking around you. The writing is OK, too. (You can get a sense of it from the free PDF of the first chapter.) Firm-internal career ladders are gone or severely truncated. Many jobs have been intentionally de-skilled and simplified so that workers need less training, can be more easily fired, and their services more readily contracted out to specialized firms, which themselves have no internal career ladders. Surprisingly, increasing demand for technical skills seems to explain only a negiglbe portion of wage stagnation; engineers' wages have actually fallen, and even those for workers with computer science degrees have risen very little in real terms. Personally, I find this result especially distressing:

Workers with college degrees did not see significant growth in their wages during the 1980s and 1990s but were generally able to hold their own ground. Workers with less education, however, saw large declines in real wages. The increase in the high school wage penalty between 1979 and 1995 varies from one labor force group to another [typically in the range of 30 to 60 perecent].

Accompanying these changes, shafting the people at the bottom, things have actually gotten better for people at the top, such as their "new nomads". For these people, the management-guru fairy-tales about flattening hierarchies, self-direction, personal flexibility and creative work are, if not true, then at least recognizable. I have friends who qualify for membership in this class, and I suppose I do myself. (It would be interesting to know how many people in this category are the children of salarymen --- most, I imagine.) It's an appealing niche in many ways; it's a shame that the same organizations which make it possible for a small number of us to enjoy it currently rely on many others being stuck in the low road.

And for the really rich, of course, the last thirty-odd years have been great. There are so few of these people that they are essentially invisible in the statistics here.

Inevitably, perhaps, Bernhardt & co. are a bit less convincing when it comes to explaining why these changes have come about; it's simply much harder to rule out alternative explanations, and much of the data one would really like simply isn't there. (It's not enough to say that capitalists and managers will give workers the rawest deal they can get away with, because that's always true. The question is why firms and managers have become more effective at screwing over workers recently, and you can't explain a variable with a constant.) Given the kinds of causes the authors (plausibly) argue are at work, however, it's hard to see what they suggest really making much of a difference; my suspicion is that regional action would be ineffective, but that national-level risk pooling (say, universal health insurance) might actually do a lot to mitigate the effects of the new labor market. To be fair, however, I haven't gotten to the last chapter of the book yet, where they advance constructive proposals.

My feeling is that the transformation of the labor market is one of the most important things to have happened in the US during my lifetime (and it does pretty much coincide with my lifetime); its consequences are manifold, and often profoundly morally ugly. It is a great luxury to be able to think about this transformation, as opposed to struggling to preserve one's life and a modicum of dignity in its midst. Shamefully, my thoughts keep running in circles: we need political change to reduce inequality and the shift of risk to those in no position to bear it, but our politics is driven by those who've profited most from the risk shift (and their hired minions). The only way out I can see is some new form of organized labor, adapted to the new job market. What that might look like, I have no idea, but I am sure it will be resisted mightily.

Happy May Day.

The Progressive Forces; The Dismal Science; The Beloved Republic

Posted at May 01, 2005 21:45 | permanent link

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